No Debt Ceiling Deal: Bullish?

Discussion in 'Economics' started by buzzy2, Jul 30, 2011.

  1. If the debt ceiling is not lifted, the treasury has enough revenue to service US debt, and the Constitution guarantees bondholders will get paid first. US bonds will become a limited supply commodity and that's why treasuries are not selling off. They will become more expensive driving interest rates lower, which is bullish.

    A federal government without capacity to borrow or increase revenues will have no other option but reduce spending therefore reducing the deficit, and that's good for its solvency and its ability to service its debt.

    I don't see any reason why rating agencies should downgrade US debt, on the contrary if there's no debt deal they should upgrade it, if it were possible. A downgrade would mean they are sellouts bought and paid for by democrat lobbies.

    I think the media is playing along with the democrats threatening with economic and financial Armageddon if the House doesn't give them the ability to spend their way into bankruptcy just like Greece and the PIIGS.

    Their accusations of republican obstructionism are hilarious since they have been doing all the obstructionism for months and not doing any counteroffer proposal.
    The most notorious example is the POTUS rejecting the bipartisan consensus bill last friday, and then he says the next week he wants a bipartisan bill? Ridiculous.

    Now we know why, the democrats have been all along manufacturing a crisis to get leverage in order to force the House to give them what they want at the very last minute. This is very irresponsible.

    A deal would mean giving a reward to this kind of destructive maneuvers, that's why you don't negotiate with terrorists or kidnappers.

    Therefore it would be better for America if there's no deal.
  2. Eight


    Obama says that if we don't lift the debt ceiling then disaster will ensue... I think he's talking about disaster for the Democratic party though. They need ever more money to keep buying those ghetto votes...
  3. Moody's: No plan protects AAA rating, but there will be no default is there's no deal.

    "the nation will only default if it misses an interest or principal payment on U.S. debt, not if it misses payments on other obligations like federal employee salaries or Social Security benefits."

    "If the debt limit is not raised (...) we believe that the Treasury would give priority to debt service payments and could thus postpone a potential debt default for a number of days" it said. "Revenues would be more than adequate for some period of time to meet those payments, although other outlays would be severely reduced as a result."

    Wrong: the Constitution guarantees that bondholders will get paid first, "other outlays" come second, so default is not possible given the current level of revenues.

    "Moody's said it would not reaffirm the nation's AAA rating unless there is at least a six-month boost to the debt limit"

    So if Boehner's plan was enough for Moody's, why it isn't enough for the democrats? Who's the obstructionist here?
  4. toc


    Time for US Army to make a call to prominent politicians that they have to set aside ego and views and take decision for the American people's interest first. Only one phone call to WH and RATS will do the job.

  5. Washington Annoyed at Wall Street's Failure to Panic

    Democrat source: "Frankly, a bit of panic would be very helpful right now," (to convince Republicans to vote for a debt ceiling hike) "Every day we wake up and think that stocks will send a shock up to Capitol Hill. And every day nothing happens,"

    Disgusting. They think like kidnappers or terrorists.
  6. Another reason no deal is bullish: foreign investors looking to place money in the US will have no other place than equities due to treasuries' low yields.
  7. 377OHMS


    The fed has shunned its responsibility to properly set interest rates in order to regulate the economy. When the fed failed to raise rates during the 2004 real estate price run-up they simply became an arm of the executive branch rather than an independent entity.

    Subsequently the accelerator pedal has been mashed to the floor ever since that time. FAIL.

    Now our interest rates will be set externally. Rates should be higher, many in the financial industry understand that.
  8. US Army comes second after bondholders, so they are also fully covered and protected in this mess.
    Failure to a reach a compromise deal is actually best for the Army because any spending cutting bill will neccessarily touch some military spending.
  9. We're talking long term rates here, besides QE2 attempt, the Fed doesn't fix long term rates.
  10. toc


    Agree the views on technical basis. But what is the first and foremost duty of the US Army: I think it is to guard the interests of the American people and any act by the politicians that can potentially result in 'catastrophic chaos' of all kinds in the country should not be allowed to happen. US Army's concern should not be only if they will receive their check but to prevent 'Armageddon' type scenarios. I hope you understand what I am getting at. In many a ways it is a matter of national security.

    #10     Jul 30, 2011